patrick.net

And the European headline risk is back.

Cramer soundboard: "The house of pain!"

TMAC54 says

Passifists thought Hitler to be a nice fellow. They said "Just leave him alone. Everything will be allright".

Put it in context. Something like 1 in 6 Frenchmen aged 16-30 died in WW1, and about a quarter of the country ruined.

THAT explains the hesitation to engage in another war.

Grandpas who lose a couple of grandkids and see their house demolished by artillery and lose all their possessions tend not to growl about killing the "bad guys" from under their blue CVN-65 Eisenhower caps.

http://www.youtube.com/embed/ADA88QlizrU

This got my attention: "Austerity works when combined with growth initiatives. I am a big believer in Britain exiting their programs in much stronger shape and being better set for the next bull market. Progress is being made but Greece is the anchor holding back the EU.

The problem is Germany took a bitter pill for the better part of a decade when they integrated East Germany and emerged an economic powerhouse.

They see Greece as a basket case which wants to be a part of the EU but take none of the necessary medicine required to get well. It is no wonder they have no sympathy for the Greeks. Have the Greeks reformed their tax code or competitiveness? Let's not forget that the Greek's fudged the books to get into the EU. "
--David Urban

For what it's worth:

http://finance.yahoo.com/blogs/daily-ticker/greece-tearing-europe-apart-politically-socially-economically-william-131234803.html

Morgan Stanley raised its odds of a euro breakup to 35%...

http://finance.yahoo.com/blogs/daily-ticker/europe-vicious-cycle-continues-132927347.html

American in Japan says

This got my attention: "Austerity works when combined with growth initiatives. I am a big believer in Britain exiting their programs in much stronger shape and being better set for the next bull market. Progress is being made but Greece is the anchor holding back the EU.

Translation: Austerity works if we can cut wages, worker protections, immigration controls, pensions, lower taxes on the 1% and raise fees and taxes on the 99%... Let's not let a good crisis go to waste; even though this crisis was started at perpetuated by financial shenanigans and the subsequent bailouts, let's pretend it's because of maternity leave and overtime.

Germany spent money like water to integrate East Germany, update the infrastructure, fix the ed system, raise wages, provide housing subs, etc.

thunderlips11 says

Translation: Austerity works if we can cut wages, worker protections, immigration controls, pensions, lower taxes on the 1% and raise fees and taxes on the 99%... Let's not let a good crisis go to waste; even though this crisis was started at perpetuated by financial shenanigans and the subsequent bailouts, let's pretend it's because of maternity leave and overtime.

Don't you just love how the financial sector rules everyone? 30 years ago the smart kids were going into engineering and medicine. Now they're going into "finance."

Thanks Thunderlips!

And now the Greek elections!

Greek elections could be the start of something bigger

Greek Election Results: New Democracy Party got the most seats

Spain pays record for medium-term debt.

http://finance.yahoo.com/news/spain-pays-record-medium-term-102929921.html

One of my friends says that things are now looking up in Europe and that they will only get better from here. I just can't believe it...

Asuterity... Again?

Spain to unveil austerity steps...soon (Yahoo)

I have one friend who says Europe has solved its problems and is on its way up from here. I just can't believe him...

American in Japan says

I have one friend who says Europe has solved its problems and s on its way up from here. I just can't believe him...

People can be blindly optimistic.

It is clear to me that they solved one of the many structural problems, however they are still not on equal footing as the United States.

Here's part of the (present) state of Europe, as told by a European Parliamentarian

What follows is a snippet. Here's a link to his full address to Americans: http://www.geertwilders.nl/index.php/component/content/article/87-news/1795-speech-geert-wilders-at-the-western-conservative-summit-denver-30-june-2012)

Certain parts of our inner cities no longer look like Europe. They look like suburbs of Cairo, Rabat, Algiers, Damascus or Mecca.

As the Muslim population is concentrated in urban areas, many European cities have very large Islamic concentrations. We are confronted with headscarves and burkas, polygamy, female genital mutilation, honor-killings.

During the past three decades, Europe made a fatal mistake. It allowed millions of people from Islamic countries to immigrate into Europe. So many people rooted in a culture entirely different from our own Judeo-Christian and humanist tradition have entered Europe that our heritage, our freedoms, our prosperity and our culture are in danger.

Perhaps, many Americans still believe that Europe is the place they know from a tourist trip or from their grandparents' stories. This Europe is on the verge of disappearing.

"In each one of our cities" wrote the Italian author Oriana Fallaci shortly before her death in 2006, "there is a second city, a state within the state, a government within the government. A Muslim city, a city ruled by the Koran." – End of quote.

"The Islamic Republic of Europe" - it's only a matter of demography and time.

B.A.C.A.H. says

"In each one of our cities" wrote the Italian author Oriana Fallaci shortly before her death in 2006, "there is a second city, a state within the state, a government within the government. A Muslim city, a city ruled by the Koran." – End of quote.

God Bless...er...Allah Bless Europe.

From the "what's a strong currency to do files":
I almost did a spit take on the paper last week when I read that the Danes and Swiss are now offering negative rates on their short term bonds.

A not so optimistic view of Europe from Charles Hugh Smith...

http://www.oftwominds.com/blogjuly12/EU-death-spiral6-12.html

Yikes it's almost like there's no free lunch or something.

Another good article:

http://www.cfr.org/europerussia/europe-waiting-next-shoe-drop/p28294

Those articles are hilarious, because like so many others penned by elites who focus too much on the palace potentiates they're ignoring the big picture.

Demographics is the big picture, not the economic tides.

You don't think so? Just ask Native Americans who faced the demographic changes in their continent during various and sundry nineteenth century USA economic crises.

John Mauldin wrote last week in his economics web site that while, ahem, Europeans are no longer a religious people, he reckons that they are finding a new secular religion, a religion of some kind of federated/integrated European entity.

In the context of the trends and changes that are much larger than "Euro-this, sovereign debt - that", I suppose he is partly right, though missing the main point. There is a vibrant and growing demographic in Europe which in time will allow "the Europeans" to grow out of their problems, and they are religious Europeans, too. But the religion is not the "secular" religion for a united Europe, unless you mean for a "united" European Islamic Republic. No telling what may come of those sovereign debt notes in the decades to come under sharia law.

B.A.C.A.H. says

But the religion is not the "secular" religion for a united Europe, unless you mean for a "united" European Islamic Republic. No telling what may come of those sovereign debt notes in the decades to come under sharia law.

True.

And you thought the hated Christians were your worst enemy...

Part of me says there is entirely too much pessimism about Europe. The Germans won't let the EU fail, it's crucial, absolutely vital, to the German economy. Europe can get by without Germany and just default - but the Germans can't lose BOTH loan payments and the Common Market without destroying Germany's way of life.

Merkel's footdragging is only giving Germany a Cheap Charlie Rep, instead of establishing itself as the Hero and Savior.

B.A.C.A.H. says

Demographics is the big picture, not the economic tides.

Yes for the long term; about 2 decades or more. But for the next 15 years, this won't matter.

In terms of the economy, they just keep kicking the can down the road, and I think they can only keep this up for a few more years (maybe 5?). The dam will break much sooner than most people think, and that is a big concern.

thunderlips11 says

Part of me says there is entirely too much pessimism about Europe. The Germans won't let the EU fail, it's crucial, absolutely vital, to the German economy. Europe can get by without Germany and just default - but the Germans can't lose BOTH loan payments and the Common Market without destroying Germany's way of life.

Merkel's footdragging is only giving Germany a Cheap Charlie Rep, instead of establishing itself as the Hero and Savior.

Homo Economicus. A Legendary Creature, like Bigfoot, claimed to exist by Pseudoscientists.

I couldn't disagree more. Germany does not need most of Europe at all. Germany lives in a permanent state of austerity, suffers from a strong Euro as they're an export-driven economy, and is most at risk from an entitlements cliff that dwarves that of the US. They won't receive any relief from their neighbors, all of which have even worse demographically-driven entitlement cliffs.

Germany has been facing a declining "global share" of value-weighted exports while Japan has been mostly holding steady and the US has been increasing (against what current common wisdom and pop hype has told you, the US continues to increase global share of value weighted trade -- the only non Asian country still growing). Germany has huge problems, and those problems are only further complicated by carrying Europe on their backs.

The ONLY reason Germany would keep supporting the EMU is for geopolitical reasons. I listen to Deutsche Welle in German quite a bit, and I'd say 90% of the discussions are purely political in nature and center around whether Germany is better off trying to make Europe into Germany, something which many believe is folly (myself included), or whether they're better off reclaiming Germany as its sovereign self.

Randy H says

Germany has been facing a declining "global share" of value-weighted exports

Let's put that in context. The total value of German exports has doubled over the past decade:

http://www.tradingeconomics.com/germany/exports

Randy H says

Germany does not need most of Europe at all. Germany lives in a permanent state of austerity, suffers from a strong Euro as they're an export-driven economy, and is most at risk from an entitlements cliff that dwarves that of the US.

Germany is certainly not in a permanent state of Austerity. It is not Ireland. The German economy is very healthy, from unemployment to exports, it has all the marks of a bustling economy, despite the Great Recession. The Germans may want Austerity for Europe but certainly not for themselves, as recent election results illustrated with Merkel's party being handed several key defeats.

Where do the bulk of German exports go to? Europe.
http://2.bp.blogspot.com/_1V7wnZxPqok/S4d4imEOwhI/AAAAAAAAMpI/fOJlny_yXG8/s400/germany+trading+partners.jpg

The weaker Euro means that German Goods are actually more competitive now that they were a few years ago. Germany is not running an Austerity program.

Germany has a $150B Trade Surplus, contrasted with America's ~$600B Trade Deficit that only grows worse over time. We should kill to have those numbers.

The EU provides a host of benefits to Germany: A common currency and reduced trade barriers, both of which benefit Germany's exports (and banks). Leaving the EU will have severe effects on German exports; trade barriers will return, And if Austerity, which almost never works, becomes widespread in Europe, that will also have a negative effect on Germany's economy.

Germany has:
* Lower unemployment than the US
* More productivity per worker
* A massive Trade Surplus
* Less Debt than the US

A little more chart porn:

The Euro was the best thing that ever happened to Germany.

Waiting for this week's European Bank offer...

Boj policymaker warns of uncertainty over recovery amid Europe woes

What? I thought it was said that all is well now!

Ah yes, words are important

thunderlips11 says

The Euro was the best thing that ever happened to Germany.

They sure are ;)

Wall Street closes at three-month high on hopes for Europe

"Sentiment in Spanish and Italian bond markets - the forefront of the three-year debt crisis - improved, with two-year Spanish yields falling to 3.42 percent on Monday, less than half of a late July high of over 7 percent."

Whatever, I'm still not convinced.

European headline risk will be back.

How bad is Greece? Worse than you think--Ross

But I thought...

A personal account of Greece:

Life in Greece since the recession began (Peakprosperity.com)

How bad are things in Greece?

About as bad as they are in Japan:

from
http://www.indexmundi.com/greece/total_fertility_rate.html Total fertility rate: 1.39 children born/woman (2011 est.)

from
http://www.indexmundi.com/japan/total_fertility_rate.html 1.39 children born/woman (2011 est.)

for comparison from
http://www.indexmundi.com/united_states/total_fertility_rate.html Total fertility rate: 2.06 children born/woman (2011 est.)

And these: Doubts still hang over Spain (Yahoo.com)

New protests in crisis hit Spain as debt deficit to surge (Japantoday.com)

American,

Europe is not American and Europe is not Japan. What is going on there is kinda fascinating, I agree. Kinda like a slow motion crash.

Just asking: being as how you are an American (not European) in Japan (not Europe) why the obsession with Europe?

I may live their in the future. What's more it seems like world markets hinge on the precedents being set in Europe are affecting world markets...but what do I know...

Another one funny or not :

Spain finance ministers claim there is no bailout!